WASHINGTON (Reuters) - Real estate mogul Donald Trump vowed on Tuesday to turn a towering Washington landmark into one of the world's top luxury hotels, part of a rejuvenation of the U.S. capital's downtown.

The entrepreneur and TV personality said "cost is no object" when it came to restoring the 1890s-era Old Post Office Building on Pennsylvania Avenue midway between the White House and the Capitol.

"As far as the building itself, it will be magnificent at the highest level," Trump told a news conference on his plans for the hotel, flanked by three of his children and District of Columbia officials.

After the $200 million project is completed, the hotel will have about 270 guestrooms, averaging more than 600 square feet (56 square meters), the largest in the District of Columbia. Each will have a crystal chandelier.

The Old Post Office Building was built to house the U.S. Post Office Department and the Washington City Post Office. At 307 feet, it is one of the tallest structures in Washington and offers superb views.

Various federal agencies had shared the building since 1934. The General Service Administration, the government's property arm, has considered it "underused" for years, according to GSA statements.

The GSA selected Trump Hotel Collection to turn the site into a luxury hotel in February 2012. The Trump organization is financing the project.

The property will be known as Trump International Hotel, The Old Post Office Building. Construction is scheduled to begin in spring 2014, and the hotel plans to open in 2016.

Trump's plans come as Washington is enjoying an economic upturn, with about 1,000 people a month moving into the District of Columbia, reversing decades of decline.

A few blocks from the new hotel is CityCenter, a 2.5 million-square-foot (233,000-square-meter) mixed use development and one of the biggest downtown projects in the United States.